It will come as no surprise if the Federal Reserve has an announcement to make when its latest policy meeting ends Wednesday: That it’s ready to begin paring its enormous $4.5 trillion portfolio containing Treasurys and mortgage bonds.
The Fed expanded its bond holdings — the major assets on its balance sheet — in the years after the financial crisis erupted in 2008. It bought the bonds to try to hold down mortgage and other loan rates and support a fragile economy.
The Fed stopped buying new bonds in 2014 but kept its balance sheet high by reinvesting the proceeds of maturing bonds.
Now, with a much stronger economy, Fed officials are expected to announce a starting date to begin allowing the bond holdings to shrink gradually. No one is quite sure how the financial markets will respond over time.
One thing not expected Wednesday is any change in theThis post was originally published on this site